A few months ago Buzzfeed News published thousands of hitherto secret Suspicious Activity Reports (SARs), most dating from 2011 to 2017, submitted by banks to the US Department of Justice. Banks with licenses to trade in US dollars are obliged to file SARs with the Department’s Financial Crimes Enforcement Network whenever they detect potentially criminal transactions. The reports do not prove criminal activity, but banks risk being penalized if they fail to flag any transactions that later turn out to be part of a criminal or corrupt money-laundering scheme.
SAR reporting became law in the US in 1992, after the ease with which the 9/11 hijackers were, in 2001, able to send considerable sums of money through the financial institutions of the United Arab Emirates and the United States shocked American politicians. Complex international systems for moving money about the world had been engineered over decades, with the complicity of the banking system, to enable people to shift funds largely undetected.
Buzzfeed’s trove of leaked documents confirmed that clear patterns of ongoing money laundering continued unabated under the noses of licensed institutions and federal officials. If a bank files an SAR and the DOJ doesn’t react, the bank can (and they do) permit such transactions to continue. And they make a lot of money doing it. The numbers involved just in the Buzzfeed documents suggest a staggering $2 trillion dollars in potentially laundered funds. My own calculations conclude that something in the region of $22 trillion in suspicious transactions is unaccounted for every year. Like the revelation of the Panama Paper and the Paradise Papers, the Buzzfeed trove has so far invoked little more public response than a bout of hand-wringing.
Sarah Chayes will not be surprised by these ongoing revelations of collusion among criminals, legitimate corporate entities, and the regulators who are supposed to constrain them. Her recent book, On Corruption in America, draws a clear line from the brutal practices associated with robber-baron cartels in the late nineteenth century to today’s corporate and financial institutions, which benefit from a scale offered by globalization that was hitherto undreamt of. Jay Gould, Andrew Carnegie, John D. Rockefeller, J.P. Morgan, et al., pioneered practices of intimidating competitors, consolidating industries, and concealing profits that have since been taken up by characters as diverse as the oligarch Boris Berezovsky, the leadership team at Enron, and now the tech industry, as these practices have wrapped their arms around the world.
For Chayes, American corruption has its roots the practices of American capitalism. Her argument is complex and involves long excursions into early stages of human evolution, ancient Greece, the Bible, the Belle Époque, and the war in Afghanistan, touching on countless bits of exotica from history and far-flung places. One example from early in the book: she understands the late Barry Lopez’s description, in his book Of Wolves and Men, of sharing food among wolves and the Naskapi, a Cree people from northern Ontario, to suggest that both species behave cooperatively. Chayes notes this sharing culture represented a social revolution within primates. Among apes, she writes, “no matter which individual brings down the prey on their hunts, it’s the alpha male that snatches it, only doling out some scraps of the feast to stave off insurrection.”
The introduction of complex social networks—eventually in the form of class, but above all, money—in her view distorted the evolution of sharing and encouraged self-promotion and greed. In the United States, the accumulation of money, which in principle offered a way to bypass the old European aristocracies, was “powerful adhesive gluing the new country together” from its beginning. “Moneymaking became a republican virtue,” and yet, “a great paradox of money is this: despite its democratizing start, once people get their hands on it in quantity, they turn it into the basis for a new aristocracy—one no better than the old, and maybe worse.”
The ascendance of self-promotion and greed as institutionalized political forces in America reached a crescendo with the robber barons, who, as Chayes documents, were able to continue siphoning off the nation’s wealth even after the introduction of antitrust laws, beginning with the Sherman Act of 1890, to limit their influence. It was FDR, with a little help from the economist John Maynard Keynes and his theoretical case for deficit spending by governments to relieve postwar unemployment, who put a stop to the gross inequalities of the Gilded Age by reining in the banks and the cartel structures of the Carnegie and Rockefeller period. As World War II drew to a close, leaving devastation across Europe and Asia, all major capitalist economies were preparing federal intervention to lift the destinies of the poor and unemployed. Spending was motivated in part to counter the lure of Communist revolutionary ideology among the desperate population, though Stalin and his successors were doing a pretty good job there on their own. The process begun by FDR to constrain business elites’ ability to consolidate and control economic conditions by eluding regulation led, in Chayes’s argument, to a golden period in the 1950s and the 1960s, during which for once the American dream was not entirely illusory.
Chayes then turns to the systems and mechanisms that have emerged over the last fifty years. Regulatory bodies checking the power of major business interests started to be dismantled under Ronald Reagan, who also lifted the lid on financial institutions and the stock market. Chayes identifies Reagan’s tax cuts as a milestone, and indeed these were like a piñata for the one percent. Reagan actually raised taxes eighttimes as well—a fact not mentioned by Chayes or many of Reagan’s hagiographers—but his tax increases were designed to shift the burden of funding government from the wealthy to the middle classes and the poor. Bill Clinton’s “new Democrat” ideology appeased these same forces by further deregulating Wall Street and enabling wealth creation and consolidation. As these federal policies unleashed the accumulation of wealth, they empowered political forces, through political donations and lobbying, that pulled a curtain over self-dealing and outright criminality by the ever-more established elites.
This great shift in American capitalism from the relatively equitable postwar period to yawning inequality and an untethered, self-interested corporate class was encouraged by the creation of an ideological network of think tanks, universities, NGOs, and lobbyists, all funded by members of that very class. Chayes duly acknowledges the ground-breaking research of The New Yorker’s Jane Meyer in this area, especially her 2016 book Dark Money.
The driving force behind corruption’s advance, then, in Chayes’s telling, is not capitalism per se (since she argues there was a benign post-war version of it), but a failure to contain the influence of money on policy and law enforcement, and the mirror influence back on the economic system to grow wealth and further shape political outcomes. She calls American corruption a “Hydra,” after the legendary Greek seven-headed monster that regrows its heads when they are cut off. Chayes saw our new Hydra in action over the many years she spent in the developing world, especially in Afghanistan, which she went from covering as a reporter to observing as an advisor to the US military command. She describes a continuous thread from the corruption of bribery-driven, fragile governments to the impunity with which criminals, major corporations, and financial institutions operate in supposedly advanced countries.
Corruption in America contains many interesting stories illuminating our current plight. Chayes is a very thorough researcher who doesn’t let go when she gets her teeth into a good tale. Her book indeed suffers a bit from this plenitude, taking the reader back and forth in time, with different cultures and historical examples coming thick and fast, and wrestling two large themes, the degeneration of America’s political economy over the past forty years and the nature of corruption itself. This abundance may leave especially the reader new to such researches at times overwhelmed, which is a shame because the implications of her work are huge. As she persuasively argues, the very forces that more and more defy any effort to contain them are also, in many cases, those most invested in maximizing exploitation of our natural resources, with devastating consequences not only for politics and citizens but for the species and the planet itself.
Misha Glenny is a former central Europe correspondent for the Guardian and the BBC. His books include McMafia: A Journey Through the Global Criminal Underworld, DarkMarket: How Hackers Became the New Mafia, and Nemesis: One Man and the Battle for Rio's Biggest Slum.
Jeff Bezos announced yesterday that he was stepping down as CEO of Amazon, on the tail of a predictably gargantuan earnings report coming amidst an economy that has most Americans hanging on for dear life. Anti-trust scholar Stacy Mitchell quipped as the announcement came out, “Good lord, how obscene are Amazon’s 4th quarter earnings that they have to obscure the huge pile of loot with a news drop like this?,” and, later, “Jeff Bezos is retiring because he wants to spend less time testifying before Congress.” Indeed, it took House Judiciary Committee member Ken Buck (R, Co), an hour or so to chime in, addressing Bezos’s successor, protégé Andy Jassy, “I have some questions for Mr. Jassy.”
In addition to rising anti-trust challenges (most salient at the moment being November charges of anti-competitive practices in the European Union and an e-book price-fixing suit in New York and investigation in Connecticut), Amazon has recently faced growing pressure regarding its workplace environment, at its core being the human costs of the near-instantaneous delivery system with which it has corralled pandemic-bound customers. Yesterday Amazon agreed to a $62 million fine for withholding tips from contract-working drivers, and warehouse workers in Alabama are mounting a strengthening unionization drive, supported by neighboring poultry workers whose own organizing has been spurred by unsafe pandemic conditions. Both warehouses are staffed largely by Black employees, and organizers are calling attention to unionization as a means of achieve bargaining power and equal conditions in the midst of calls for racial justice. Amazon has vigilantly opposed unionization; its anti-union stance was a flashpoint in its high-profile failure to establish a corporate beachhead in Queens in 2019. Vice reported in September on a highly developed internal intelligence system to identify and discredit pro-union opinion. Late last month workers in Seattle defied the company’s communication policy to criticize its record on climate, two white-collar workers having already been fired as a result of their advocacy. Amazon is apparently as resistant to criticism as it is to empowering its workers: in August, after protest, it walked back a clause in its contract to begin streaming podcasts on Amazon Music and Audible prohibiting podcasters from disparaging the company. Tim Bray, a vice president of Amazon’s cloud computing arm, resigned in April in “dismay” at the company’s treatment of protesting employees.
Another challenge that places Amazon in the crux of current questions about big tech is the moderation of its ever-expanding platform. Amazon made news in January when it removed the far-right social-media upstart Parler from its sprawling web service after Parler was used to coordinate the January 6 assault on the Capitol. As tech writer Casey Newton notes in his newsletter this week, the reach of Amazon’s web hosting as well as the openness of their marketplace puts them in a less widely noted but equally precarious spot when it comes to tech’s responsibility in the spread of disinformation. Last month ProPublica released a report on the ongoing availability of Steve Bannon’s podcast, even as he was banned from many platforms for having encouraged the rioters. Apple responded that they “catalogue” podcasts rather than distribute them. As ProPublica notes they did remove Alex Jones in 2018 for violating prohibitions against hate speech, but “what guidelines they used were a bit unclear.” Kara Swisher, on her podcast Sway, challenged Chris Best, the founder of our own platform Substack, about their systems for identifying and handling inflammatory content. Both legacy and innovative digital communications systems face potentially existential questions about the technology as well as the philosophy of moderation, and the more comprehensive tech company’s reach, the more urgent the questions become. Parler seems to have found a home with at a scrappy haven for platform outcasts called Epik, but without the support of Amazon’s globe-swaddling Web Services options are few. Not that any of this appears to be softening Amazon’s margins or market power, at least not yet.
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